Item B: Solid Waste Collection/Fee Structure

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closed competition Eugenes system is a hybrid, which can be described as . Licensed haulers have a = five-year rolling license and can operate anywhere inside the city limits. The City Charter prohibits granting an exclusive citywide franchise to haul solid waste [Chapter X, Section 43 (3)] “The council may not grant an exclusive citywide franchise to haul solid waste.” Rates are set by the City based on criteria outlined in the administrative rule, Schedule 2. (Attachment C.) Exclusive territories have been considered in the past, with previous City Councils opting to maintain a system where customers have the ability to choose their haulers. The number of haulers that Eugene residents have had to choose from has varied over time. In 1989, 22 licensed haulers provided residential and commercial collection in Eugene; today, there are seven licensees (eight are allowed by the City Code), all local companies. Sanipac has the largest number of accounts (85 percent of residential customers) and collects throughout the city. Lane Apex, with more than 12 percent of the residential customers in Eugene, has chosen to concentrate its customers in the River Road/Santa Clara area, Ferry Street Bridge/Coburg Road area, and Bethel/Danebo. The other two residential haulers have fewer than 2 percent of residential customers. There are three haulers who provide drop-box service only. This service is normally used by commercial accounts and at construction sites. The City sets collection rates by administrative order to provide stable service that includes residential yard debris collection, recycling, and multiple waste collection options. Residential rates also are progressive, charging the same or higher rates per pound for larger containers, helping Eugene meet State waste reduction guidelines. The City collects financial information from licensed haulers annually to determine license fees, and has a practice to review the data for a full rate analysis approximately every two years. City staff calculates a minimum rate sufficient to allow the “representative” hauler to earn a target profit level through continued services to its existing customers. The representative hauler is defined as the hauler with the greatest number of accounts. The most significant rate-setting policies outlined in the administrative rules, Schedule 2, are: Haulers are required to report revenue and expenses from inside and outside the City’s corporate ? boundaries to allow City staff to review the reasonableness of the licensed haulers’ reported results of operations. Disposal fees are excluded from haulers’ expenses when determining allowed profit. ? Income taxes, interest expense, and political and charitable expenses are non-allowed expenses. The ? allowed profit is set on a pre-tax, pre-interest basis so that taxes and interest are paid from the allowed profit. Residential and commercial expenses are combined for purposes of rate calculation. ? Rates are set to achieve a target pre-tax, pre-interest profit level of 11% of gross revenues. This ? profit level is comparable to the level allowed by other Oregon cities that regulate solid waste collection rates. Residential rates are progressive by assumed weights; commercial rates are progressive by volume. ? The disposal portion of Eugene’s collection rates has just been adjusted, to be effective September 1, 2007, reflecting a $20 per ton increase in disposal fees adopted by the Lane County Board of Commissioners. Although the collection portion was not increased in the most recent adjustment, preliminary results from the most recent financial analysis show an additional adjustment of 4.35 percent would be necessary to meet criteria in the administrative rule (Attachment D). L:\CMO\2007 Council Agendas\M070813\S070813B.doc